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ASOS’ Not So Secret Weapon to Success – Its Supply Chain
The retail industry has indeed undergone vast changes over the years – the catalog, big box retailing and the internet – to name a few.
For today’s retailer, it’s not as simple as hanging one’s physical or cyber shingle out in hopes of success. Instead, it is how one builds its supply chain and how responsive these businesses are to customers and it is true -no two supply chains are the same.
In last year’s Ti report on European E-Commerce Logistics, ASOS was profiled for its unique approach and understanding of supply chains. In my opinion, it continues to set itself apart from much of the pack.
In its’ financial report for fiscal 2013, the company posted sales of £769.4 million ($1.28 billion), up 39.2% from £552.8 million ($920.4 million) in fiscal 2012. With over 60% of 2013 sales from overseas, ASOS plans to continue this global expansion and invest in its supply chain to further increase sales.
The company has expanded into China and Russia and eventually will move into South Korea, Japan, India and Brazil. To support this expansion, it is investing in warehousing and technology. Asos opened a China location in November of last year and a new central European facility is scheduled to open in the second half of 2014. Also, the retailer’s Ohio warehouse is now capable of serving 20% of U.S. orders. Meanwhile, its global facility in Barnsley, England, is also slated to be expanded. This facility had been managed by Unipart Logistics but was awarded to Norbert Dentressangle in 2013 via a three contract.
Transportation management is also closely monitored by the company. Since 2012, Allport Cargo Services has managed ASOS’ international air and sea movements. This has since been expanded to include daily, overland services from ASOS’ major EMEA suppliers across 14 countries.
This attention to detail is also evident in its focus on the customer. In June 2013, ASOS and DPD introduced “Follow My Parcel Service”. This service provides real-time tracking down to a 15-minute delivery window. ASOS customers receive a text or email message on the day of delivery with an initial one-hour delivery time slot. Customers can then track their purchase using the GPS and online mapping available through the service either by web or mobile device. Since then DPD has expanded this service to the rest of it customers. Since then, ASOS and DPD have improved the service even further by launching an “early warning” email and text notification. Customers now receive a delivery notice 12 hours earlier than previously. Customers will then be able to access five “in-flight” delivery options including “Deliver to a safe place”, “Collect from nearest depot” and “upgrade my delivery”.
“Follow My Parcel Service” is similar to what FedEx and UPS offer here in the US but it seems DPD’s solution is much more robust. We’ll see how FedEx, UPS and the rest of the delivery companies respond as I believe this will become standard.
One trend that is popping up is e-commerce companies expanding into physical locations such as Alibaba’s recent investment in Intime Retail. However, ASOS has ruled out opening stores but it is testing locker collection points in the UK.
Perhaps one reason for ASOS’ great success is its use of social media. The company captures and analyzes data from a variety of sites which then is used to predict buying trends and demand. This in turn is fed back into its supply chain in order to run an efficient operation and also one that provides strong customer satisfaction. While other companies do this as well, ASOS appears to be utilizing the findings quite successfully.
While its costs are on the rise these investments, the CEO expects these investments to pay off in the next few years allowing it to grow further into new markets.
Next week, Zara will be discussed.